Deforestation is a global issue, which causes damage to the environment, contributes towards climate change and causes extinction of animal species. Over the course of the last three decades, world debt has been a driving force behind commercial deforestation.
Many of the world’s poorest countries borrowed heavily during the 1970s and 1980s; some to offset rising oil prices, some to cover the costs of civil uprisings and some to fund the costs of weapons. Whatever the reasons for the borrowing, the result was huge debt, which needed to be repaid.
As a result, countries turned towards their natural resources as the easiest way to finance debt repayments. Unfortunately, in the cases of many of the countries involved, their most valuable natural resources were located in their forests.
Deforestation became inextricably linked to debt due to the fact that forest-based products were readily available and did not require the use of skilled labour. Products like timber and charcoal could be liquidated easily, in order to raise the funds required for debt repayments.
However, the high interest rates on the money borrowed, combined with the impact the global recession had on world debt, made it increasingly difficult for many countries to repay the money they owed.
Although efforts have been made to reduce debt in many of these countries, through organisations like the IMF, much of the foreign aid went directly towards funding further deforestation projects. In addition, state-run banks in countries like Brazil, which are driven by debt, have also been heavily linked to financing projects which destroy rainforests.
Deforestation has created a debt cycle, in which short term gain has been prioritised. Countries in heavy debt turn towards forest conversion as a means of raising funds to pay off debt quickly.
However, in the long term, they are contributing towards future financial problems. For example, it is estimated that the resulting damage to forests could reduce the living standards of the world’s poor by 50 per cent inside 50 years.